Monthly Economic Update: January

Alexis DuffyMonthly Newsletter, Newsroom

January Eco Review. Newspaper on desk
In this month’s recap: Stock rally Continues

Presented by The PensionmarkMeridien Team, January 10, 2023


Major U.S. equity indexes closed out 2023 strongly in the green, marking the second consecutive month of gains for the S&P 500. A Santa Claus Rally1 was not really needed for long-term investors, as major equity indexes have been enjoying a powerful rally that began in October.


For the month of December, the S&P 500 increased by 4.42%2, the Nasdaq 100 reached an all-time monthly closing high by adding 5.51%3–and the Dow Jones Industrial Average rose by 4.84%4–also an all-time monthly closing high.


The S&P 500 has enjoyed green on the screen for nine consecutive weeks4. It closed December just 0.6%.shy5 of its all-time high, set in January 2022.

The lopsided performance6 with the “Mag 77” names leading the way has market watchers curious about the relative performance of the remaining index components of the S&P 500 heading into the new year. The rise of AI has fueled the gains in these select names, with 2024 being discussed as the year of AI implementation.


Bond markets pulled off their biggest two-month rally8 in decades. Well-deserved for long-term investors, with bonds enduring a prolonged bear market in light of rising interest rates.

Rate cut optimism helped to fuel the bond rally as investors weigh the increasingly dovish expectations of the Fed in 2024.


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“If your actions inspire others to dream more, learn more, do more, and become more, you are a leader.”


Small-cap stocks, as measured by the Russell 2000 Index, have come to life in a big way in the last two months, gaining ground on their large-cap counterparts after failing to participate in broad stock market rallies for much of the year.

Attractive valuations9 have investors chatting about the smaller market capitalization stocks, even as the Russell 2000 returned 12.05%10 in December.


December’s jobs report (November data) showed a positive trend. The Nonfarm Payroll data for November indicated a gain of 199,000 jobs11, which exceeded the estimated 190,000 and the previous month’s gain of 150,000. The result is a “just right” scenario, or what some describe as a “Goldilocks” scenario. The healthcare and government sectors12 have created many of these new employment opportunities.

The labor market picture shows signs of the economy experiencing a soft landing13, which is good news. This can mean that the economy is cooling down but not heading towards a full-blown recession. The markets also reacted favorably to the jobs report, as the results were very close to expectations, resulting in less volatility.

In addition, the U.S. unemployment rate dropped to 3.7%14, lower than the expected 3.9%. Overall, the labor market continues to impress, with an increase in the labor force participation rate15 and a decrease in unemployment. 


In December, the Federal Reserve held its December policy meeting and left benchmark interest rates unchanged16 at 5.25% – 5.50% for the third consecutive time, which was in line with market expectations. That said, the Fed indicated that it’s more likely to shift towards a more accommodating17 monetary policy stance soon, which could include rate cuts.

Fed members projected the possibility of three 25-basis point rate cuts18 in 2024. This move towards a more dovish19 policy was well-received by the markets, as major U.S. stock indexes rose and treasury yields fell.


According to the CME FedWatch Tool20, there is a 73.5% implied chance of a 25 basis point cut in March 2024. That said, there are some disparities to be aware of.

With the Fed broadcasting a message of 3 rate cuts in 2024, current market pricing and expectations show the equivalent of 6 to 7 quarter-point rate cuts.

Historically, rate cuts have been utilized by the Fed as stimulus during periods of economic contraction. Looking at the major stock market indexes, there are no signs of cooling–at least not at the end of December. Wall Street and Main Street are two different things, however.

December featured a bullish continuation from November’s rally across major market indexes.

As January begins, the feeling across markets is easygoing at the time of writing. Markets could be overdue for some time of pullback after this recent runup, which could create opportunities for investors with cash on the sidelines21.

If your New Year’s resolution is financially based, or if there is anything we can help you with, please reach out.

Happy New Year!

The PensionmarkMeridien Team may be reached at 866-871-9963 or

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This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.


  2. Trading View, December 31, 2023
  3. Trading View, December 31, 2023
  4. Trading View, December 31,2023
  5. KVUE, December 29, 2023
  6. Trading View, December 30, 2023
  7. Alliance Bernstein, December 20, 2023
  8. Reuters, December 29, 2023
  9. Yahoo Finance, December 29, 2023
  10. Trading View, December 31. 2023
  11. CNBC, December 8, 2023
  12. U.S. Bureau of Labor Statistics, January 5, 2024
  13. Yahoo Finance, December 8, 2023
  14. CNBC, December 8, 2023
  15. Yahoo Finance, December 8, 2023
  16. PBS, December 13, 2023
  17., December 13, 2023
  18. The Conference Board, December 13, 2023
  19. 2024
  20. CME Group, January 5, 2024
  21. Yahoo Finance, December 24, 2023

Pensionmark Financial Group, LLC (“Pensionmark”) is an investment adviser registered under the Investment Advisers Act of 1940. Pensionmark and WIA Holdings, LLC (“World”) are affiliated through common ownership with Pensionmark Securities, LLC. Securities offered through Pensionmark Securities, LLC (Member FINRA/SIPC).